The Indian agency was investigating the group after Hindenburg Research exposed misuse of tax havens and stock manipulation last year.
India’s Supreme Court says the Adani Group need not face further investigations beyond the market regulator’s current scrutiny, a major relief for the conglomerate hit hard by allegations of wrongdoing by a US-based short seller.
The Securities and Exchange Board of India (SEBI) has been investigating the Adani Group, run by billionaire Gautam Adani, after Hindenburg Research reported in January 2023 the misuse of tax havens and stock manipulation by the cluster.
The Adani Group denied the allegations, but Hindenburg’s report still shaved $150 billion off its stock market value.
Although some investor confidence returned in recent months as Adani gained backing from bankers and investors, the Hindenburg report and regulatory scrutiny have weighed on the group’s business and reputation.
The Supreme Court, which was ruling on cases brought by public interest litigants seeking a special investigation team to investigate the matter, said Wednesday that “the facts of this case do not justify” such a change, even though the court had powers to transfer research.
The verdict indicates that there will be no further regulatory or legal risk to the Adani Group beyond the current SEBI investigation.
Reflecting that view, shares of several Adani Group companies rose: Adani Energy Solutions rose 9.1 percent, Adani Total Gas rose 7.1 percent, Adani Green Energy jumped 5.5 percent and the flagship business Adani Enterprises rose 2.6 percent, Reuters news agency reported.
The top court, which was overseeing the SEBI probe, also said there was no need to order any change in the country’s disclosure rules for offshore funds.
Hindenburg had alleged that Adani’s offshore shareholders were used to violate certain SEBI rules, even though the company maintained that it complies with all laws.
After the Supreme Court ruling, Gautam Adani said on X, formerly Twitter, that the court’s ruling shows that the truth has prevailed and that the group’s “contribution to India’s growth story will continue.”
“After this verdict, global investors will have more confidence in investing in the company’s shares,” said Deven Choksey, managing director of KRChoksey Shares and Securities Pvt Ltd, a brokerage.
The regulator had previously informed the Supreme Court that it would take appropriate action based on the outcome of its investigations. On Wednesday, the court gave SEBI three months to complete its investigations.
The Supreme Court also said it does not need to intervene in the current regulations governing offshore investors of Indian companies. SEBI tightened those regulations in June by making disclosures stricter to bring clarity to opaque corporate structures.
Under Indian law, each company must have 25 percent of its shares in the hands of public shareholders to prevent price manipulation, but Hindenburg alleged that some of Adani’s offshore shareholders were used to violate this rule. Adani has said he complies with all laws.
“The procedure followed to arrive at the present form of the regulations does not suffer from irregularities,” the court said on Wednesday, while upholding SEBI’s regulatory position on disclosure of foreign portfolios.
